Decline in Jobs Influenced by Bad Weather

The headline decline of 84,000 jobs in the December employment report was worse than expected, but a key culprit may be the weather.

Temperatures in the U.S. were running above normal from October through late November, but turned sharply lower last month right around the time that the Labor Department calculates its jobs numbers. The household survey of the jobs report showed that the people “not at work for weather reasons” hit 283,000, the highest reading since 2005. Those people are still counted as employed, but the elevated level suggests the extent of weather-related effects in December.

The cold snap may have triggered seasonal layoffs in outdoor areas of employment, especially construction. Indeed, the construction category of the December report noted a drop of 53,000 jobs.

Meanwhile, the weather also may depress the length of the average workweek, which was unchanged in the December report at 33.2 hours. Economists look to increases in the length of the workweek as a leading indicator, as companies raise the hours current employees work before reaching out to boost hiring.

“From a weather standpoint, the situation actually looks quite similar to December 2005 when employment registered a well below-trend performance,” said David Greenlaw of Morgan Stanley in a research note ahead of this morning’s report.

If the weather was a significant influence, it suggests that the economy is still on track to start adding jobs soon. “The recent performance of the jobless claims figures and other indicators (such as the Challenger layoff tally) point to the likelihood of a much better employment outcome in January,” said Greenlaw.